Things are not happy over at castle NVIDIA. The graphics company has shocked investors by announcing Q2 revenues will be significantly lower than was expected, after a slowing of the market and, more concerning, a one-time hit that could reach $200m over faulty graphics cards. The latter has been affecting certain previous-generation GPU and MCP products used in notebook systems, which are now experiencing “abnormal failure rates”; the $200m is being set aside to pay for repair or replacement under warranty.
As a result, NVIDIA’s share price lead-ballooned after normal trading hours, falling 19-percent. The company warned that quarterly revenues were likely to be in the region of $875m to $950m, with gross-margins down on inside expectations.
The GPU problem manifests itself in the system overheating, with the interaction of the chip material set and the system design itself leading to the flaw. NVIDIA themselves have remained relatively coy with details; president and CEO Jen-Hsun Huang described the situation as “challenging”:
“This has been a challenging experience for us. However, the lessons we’ve learned will help us build far more robust products in the future, and become a more valuable system design partner to our customers. As for the present, we have switched production to a more robust die/package material set and are working proactively with our OEM partners to develop system management software that will provide better thermal management to the GPU” Jen-Hsun Huang, president and CEO, NVIDIA
NVIDIA will officially announce its Q2 financial performance on August 18th 2008.